Correlation Between Kyung In and Lotte Fine

Can any of the company-specific risk be diversified away by investing in both Kyung In and Lotte Fine at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kyung In and Lotte Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kyung In Synthetic Corp and Lotte Fine Chemical, you can compare the effects of market volatilities on Kyung In and Lotte Fine and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kyung In with a short position of Lotte Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyung In and Lotte Fine.

Diversification Opportunities for Kyung In and Lotte Fine

0.7

Correlation Coefficient

Kyung In  Lotte Fine

Poor diversification

The 3 months correlation between Kyung and Lotte is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kyung In Synthetic Corp and Lotte Fine Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Fine Chemical and Kyung In is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kyung In Synthetic Corp are associated (or correlated) with Lotte Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Fine Chemical has no effect on the direction of Kyung In i.e., Kyung In and Lotte Fine go up and down completely randomly.

Pair Corralation between Kyung In and Lotte Fine

Assuming the 90 days trading horizon Kyung In Synthetic Corp is expected to generate 0.68 times more return on investment than Lotte Fine. However, Kyung In Synthetic Corp is 1.46 times less risky than Lotte Fine. It trades about 0.1 of its potential returns per unit of risk. Lotte Fine Chemical is currently generating about 0.02 per unit of risk. If you would invest  274,946  in Kyung In Synthetic Corp on December 23, 2024 and sell it today you would earn a total of  22,054  from holding Kyung In Synthetic Corp or generate 8.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Kyung In Synthetic Corp  vs.  Lotte Fine Chemical

Kyung In Synthetic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kyung In Synthetic Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kyung In may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Lotte Fine Chemical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lotte Fine Chemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lotte Fine is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kyung In and Lotte Fine

The main advantage of trading using opposite Kyung In and Lotte Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyung In position performs unexpectedly, Lotte Fine can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lotte Fine will offset losses from the drop in Lotte Fine's long position.

The idea behind Kyung In Synthetic Corp and Lotte Fine Chemical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.